I couldn't care less whether you agree with me or not; if fact I doubt you will since you've locked yourself into a certain position from which you quite possibly will not retreat. Despite that I think it may help to actually understand what I've said whether you agree or not.
The two portions dealing with the subject of FICA payments and the funding of the two entitlements (S/S & M/C) by means of the FairTax are Section 101 (a) through 101 (b) (4) and entitled "IMPOSITION OF SALES TAX" and the second part is Sec. 904 (a) through (f) entitled "TRUST FUND REVENUE".
The wording in Sec. 101 is the controlling text in determining the FairTax rate while the text in Sec. 904 deals solely with the administering the entitlements and the funding thereof as already determined by statutes already passed and in effect from congregational action. The actions controlled by Sec. 904 are no different in principle that existing actions government is authorized to take (without voting) by the existing entitlement laws.
The reason for this wording (Sec. 904) being part of the FairTax legislation is so that there can be no claim that the FairTax is failing to fund the existing entitlements (basically S/S & M/C) at (at least) the existing levels - which are called out in Sec. 904. Here, the SSA bureaucrats have nothing at all to do with altering the tax rate in the bill; they are just administering the statutes passed by Congress in the past and allocating the money as determined by existing law. This is really no different than when unemployment taxes or the wage base (the amount of wages taxed) for payroll taxes change or the level of child credits, the personal and dependent exemptions, or even the actual tax brackets used each year under the income tax. All affect the amount of tax you pay, all are handled by "unelected bureaucrats" and none need be voted on yet there seems to be no discomfit on the part of any of you about that.
What I have repeatedly said to you throughout this thread is that these SSA guys do not get to change the tax rate. There is no provision for them to do so in the bill. That's the function of Sec. 101 in which they play no part. All they do is determine the apportionment of funds raised by the FairTax into the different "buckets" so that the entitlements are funded as required by law. I have NEVER said that the allocations determined under Sec. 904 might not cause the total tax rate to be larger than the original 23%. What I HAVE said is that such a circumstance is not going to happen - and I'll show this to you later using actual government numbers. As I've tried to get across to you the allocation proportions will actually decline rather than increase even as wages increase over time and the wage base grows due to the increased economic activity brought about by the FairTax.
The truth of this can easily be seen by reviewing the latest dynamic analysis paper (by Laffer et al) on the FairTax website. In this paper it is shown that over about the next 10 years that consumption (the FairTax base) will grow considerably starting from a baseline over a 10 year period by using the 2004 GDP set to 1.0 and assumes the economy will grow at its usual 3.0% per year which closely approximates the actual economy according to the BEA. This 3.0% rate is, if anything, conservative as the paper points out, meaning that the results in the paper and as I present below are probably on the low side and will actually be bettered by the FairTax performance.
Taking the consumption growth (basically a DPI growth assessment) over a 10 year period, the study shows that consumption will grow a good bit faster than the baseline number so that in the first year the increase will be not 3% but 5.4% and so on until in year 10 the increase is a full 11.7% over the 3% year-to-year baseline.
I've taken this assessment and incorporated it into a spreadsheet listing (NOT a table) starting from the projected 2007 FairTax base of $11,244 B$ derived by the Kotlikoff paper and expanding the figure by 3% per year then making the further expansion of consumption beyond this baseline each year determined by the Laffer et al paper. The actual FICA numbers (the OASDI and HI referred to in the bill's language) are taken from the NIPA Tables for the most recent year available (762.9 B$) and projected upward using the same expansion techniques as for the balance of the listing except that the FICA numbers are expanded at a faster rate than the GDP rate since the improvements caused by the FairTax should result in increased employment/wages and therefore a 3.5% per year expansion is used so that workers are earning proportionately more each year. The FICA numbers used include the requisite amounts from SE wages also.
The key things to notice (intermediate years are not shown but are taken from the Laffer et al consumption calculations) is that the resulting entitlement rates DECREASE each year despite the increased wage base used and that the resulting percentage of the two of the total FairTax rate of 23% (which has 8.09% for the two entitlements and 14.91% - the GRR - as the balance of the rate) eventually goes from the 8.09% presently (the OASDI & HI together) down to a bit under 6.80% from the present 8.09%. This has the corollary effect of reducing the term (defined in Sec. 101 of the bill) "Combined Federal Tax Rate Percentage" from the initial 23% down to 21.71% in year 10. It also means as shown in the spreadsheet listing that the two entitlement percentages determined by the SSA employees (your "unelected bureaucrats") as required in Sec. 904 drop from the 6.31% and 1.78% now for OASDI and HI respectively in the 10th year to 5.30% and 1.5% which (if the GRR remained unchanged and no action were taken by Congress) would reduce the total tax rate from 23% to 21.71% or other corresponding values in a given year. This in spite of workers earning more and the wage base increasing and the effect shows up each year.
Keep in mind too, that the Laffer et al paper is a dynamic analysis that purposely UNDERSTATES the beneficial effects of the FairTax as it shows within the paper. For example, the assessment of whether the 23% rate is revenue neutral (it is) in Table 3 does not even take into account the additional tax revenue that will result from taxing the illegal economy by the FairTax rate on purchases (rather than the relatively minor amount raised by the income tax from retail purchases by those funds). It also does not account similarly for the tax revenue derived from the foreign visitors/tourists to this country which number about 50 million people per year. If each of these 50 million spend $2,500 each (and 1/2 their airfare must be counted in this figure) then the FairTax revenue generated from this 125 B$ in consumption would be $28.75 B$ - a sizable amount indeed (and none would get the prebate). None of these increases are considered by the Laffer et al paper nor, indeed, by most economic studies.
Here is the spreadsheet listing (with the intervening years not shown to simplify the presentation):
Initial: FairTax base = $11,244.00; FICA = 762.90; yr+1 yr+2 ... yr+10 FICA $$$ $817.24 $845.84 ... $1,113.81 FairTax base $11,513.86 $12,073.53 ... $16,387.36 Adj over GDP 2.40% 4.25% ... 11.70% Sec. 904 rate 7.098% 7.006% ... 6.797% "new" FairTax 22.01% 21.92% ... 21.71% GRR/total FT 67.75% 68.03% ... 68.69% OASDI/total FT 5.54% 5.46% ... 5.30% HI/total FT 1.56% 1.54% ... 1.50%
The term "new" FairTax in the listing is what the resulting rate would be if there were no action by Congress. This seems hardly likely since the voters/taxpayers (which now would include ALL of us) will be quite aware (due to the 6 months lead time in the rate determination by the SSA) of the fact that the result could cause the total rate to decrease each year (even though the government would have an even larger amount of tax money) and should Congress decide to "correct" the GRR upward (or even to leave it where it is) to give themselves more money to spend from the increased funds available (a distinct possibility considering their normal proclivities), any such attempted "grab" of the additional tax money would be rightly seen by voters as a failure of Congress to reduce the overall tax rate and there would certainly be pressure upon Congress to reduce the FairTax rate by reducing the GRR from its 14.91% (from the 23% rate - or 64.84% of the overall tax revenue). It's hard to believe that voters would be that foolish when the information will be widely spread about and publicly available in sufficient time to make any such FairTax rate reduction. I think that most voters would insist on such a reduction.
At any rate, any change in the FairTax rate (which would really basically be a change in the one fixed rate - the GRR) would require Congressional action which is what I've been pointing out in this thread. Failure to change the FairTax rate downward would be, in effect, handing Congress mucho bux on a platter while maintaining the tax rate (the GRR) on the taxpayers. Some "official" reduction of the rate from 23% to, say, 22.01% would be required for publication in the Federal Register to advise everyone involved that the rate had changed to the lower number so that their cash registers, computer programs, and any forms involved could be altered to accommodate the lower rate. Keep in mind that if the GRR were left at 14.91% the indicated FairTax rate would be 22.01% but the government would have more tax revenue - and we certainly don't want that as they spend far too much already. Even so, an "official" rate announcement would surely be needed so the alterations mentioned could be made. More likely, though, would be huge political pressure to reduce the FairTax rate by GRR reduction which would require Congressional action. Since these sorts of changes affect all taxpayers I certainly believe that Congress would choose to be involved (so they can take political credit for "helping" the taxpayer).
Keep in mind Looey's #302 which said "... the law gives taxing power to SS bureaucrats ...". That is simply not true - they have no ability to change the FairTax rate at all (specified in Sec. 101) as I've shown here. Or his #233 which said "... after the first year the unelected bureaucrats at Social Security could implement their new congressional taxing power and raise the rate to 25 or even 30% without a vote from congress ..." which, again, is simply not the case as I've shown here. I believed you've stated this effect also (though I could be wrong), but your colleague certainly has - on many posts - and it is clearly wrong. If you choose to continue your assault against me as a "liar" I see no reason to continually point out that I have not "lied" despite your claims, but you'll have to do as you think best. You chose to ignore my #334 and #500 but in #334 I misstated that the GRR would rise when the analysis shows correctly that the GRR rate would not rise (being fixed in the bill) but that more tax funds would be available due to the decrease in the FICA proportionate funding. The statement should have been that in effect the GRR would be raised since more tax money would be available even under the reduced FICA proportions as the same GRR represents an increased percentage of the total tax revenue.
At any rate the FairTax rate is determined by Sec. 101 which requires the GRR of 14.91 plus the proportionate determination required by existing entitlement laws and changing the entitlement funding. If those funding requirements change the tax revenue rate required (and as shown in the spreadsheet listing, it will be decreased) then for the law to function as a practical matter all involved in collecting and remitting the tax will need to be advised of the correct FairTax rate to be used. The analysis shows that when the rates decrease for the entitlements, the FairTax rate - to retain the same tax revenue - would need to have the GRR altered downward to prevent an "excess" of tax funds (ain't that a kick?). Such an action would, indeed, require Congressional action. Not doing so would mean that Congress is knowingly sticking it to taxpayers with the full knowledge that taxpayers will be VERY aware of this action ... and that the congressmen will very likely suffer retaliation at the polls. Congressmen may not be too smart, but most certainly are not that dumb.
You're welcome to have our own opinion but neither you nor anyone else has ever offered any valid detailed analysis that shows anything different from the action shown by my analysis here. In this analysis, congregational action IS required to change the FairTax rate (by means of the GRR) due to the action of the reduced entitlement funding. Even if the GRR remains the same action will need to be taken to advise tax collectors of the new rate - and for the GRR to remain the same Congress would be "in your face" with every taxpayer since they would be receiving more tax funds (at the new lower rate) than were originally called for by the 23% rate. Perhaps you wouldn't be all over your congressmen in that event for a rate reduction, but I certainly would and I think most taxpayers would also.
Keep in mind Looey's #302 which said "... the law gives taxing power to SS bureaucrats ...". That is simply not trueIt's absoluteley true and the rest of your essay is also a lie....
You went a long way to avoid quoting any text from the bill.
....The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate...."Shall be determined by the Social Security Administration" can't mean anything other than "shall be determined by the Social Security Administrationthan" and "shall be that sales tax rate" can't mean anyting other than "shall be that sales tax rate" no matter how many ways or pages it takes for you to lie about it.
BTW, in your twisted interpretation, what exactly would the bureaucrtats at SS be required (by law) to announce if not a sales tax rate?...
The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.
The Fairtax and your entire essay are a pathetic sick joke!
Oh but there is a difference. Under the current law the SS tax rate is fixed. Under the fairtax it changes.
This is really no different than when unemployment taxes or the wage base (the amount of wages taxed) for payroll taxes change or the level of child credits, the personal and dependent exemptions, or even the actual tax brackets used each year under the income tax.
Unemployment taxes is a state thing, but it is a bad situation just like the fair tax. You have bureaucrats effecting your tax rate by calculations. The other things are all fixed by law and don't change based on some government statistics. The current SS/medicare is 7.65%, it is fixed. Without an act of Congress it stays 7.65%. The fairtax rate will go up or down based on government numbers, mainly wages. If reported wages go up relative to gross sales, the fairtax rate goes up.
I have NEVER said that the allocations determined under Sec. 904 might not cause the total tax rate to be larger than the original 23%. What I HAVE said is that such a circumstance is not going to happen.
OK, now your out of spin mode and in full LIAR mode once again. You have said more than (you think) its not going to happen, you have said it takes an act of congress for it to happen. Let's review:
post 319 by pigdog: "The infamous "unelected bureaucrats raising taxes" ploy you've continually tried (unsuccessfully) to use isn't correct and never has been. They merely determine the split of tax revenue required to fund the S/S entitlement as required by S/S law - which it should be noted isn't part of the FairTax law at all. They have no power to raise (or lower) the FairTax rate ... that's what we pay the "big bux" to Congress for."
post 328 by pigdog: "Any change in the overall FairTax rate would have to be done by Congress, not some "unelected bureaucrat".
post 351 by pigdog: " And to change the FairTax rate it would, indeed, take congressional action."
post 368 bt pigdog: "This means that the remaining portion which is the General Revenue Rate will in effect increase since the other two have decreased and the statutory rate for all three combined must be 23% (or whatever the rate ends up as in the bill) unless changed by Congress."
Why Pigdog can you still fail to admit a mistake???? You always must spin your way out of a mistake. Instead of saying you were wrong in those 4 posts, you must LIE. You are a LIAR and continue to LIE. Why???? Why not just say you were WRONG???? It blows my mind.
The two portions dealing with the subject of FICA payments and the funding of the two entitlements (S/S & M/C) by means of the FairTax are Section 101 (a) through 101 (b) (4) and entitled "IMPOSITION OF SALES TAX" and the second part is Sec. 904 (a) through (f) entitled "TRUST FUND REVENUE".Here's a question. If the the old-age, survivors and disability insurance rate and the hospital insurance rate don't change every year, why do they even exist in the bill? You could achieve what you are claiming by just having the 23% rate and then use the percentages in Sec. 904 (c) to divide it up. Furthermore, why are Sec 904 (d) and (e) even in the bill? What you claim is achieved in Sec. 904 (c).
The wording in Sec. 101 is the controlling text in determining the FairTax rate while the text in Sec. 904 deals solely with the administering the entitlements and the funding thereof as already determined by statutes already passed and in effect from congregational action. The actions controlled by Sec. 904 are no different in principle that existing actions government is authorized to take (without voting) by the existing entitlement laws.
The reason for this wording (Sec. 904) being part of the FairTax legislation is so that there can be no claim that the FairTax is failing to fund the existing entitlements (basically S/S & M/C) at (at least) the existing levels - which are called out in Sec. 904. Here, the SSA bureaucrats have nothing at all to do with altering the tax rate in the bill; they are just administering the statutes passed by Congress in the past and allocating the money as determined by existing law. This is really no different than when unemployment taxes or the wage base (the amount of wages taxed) for payroll taxes change or the level of child credits, the personal and dependent exemptions, or even the actual tax brackets used each year under the income tax. All affect the amount of tax you pay, all are handled by "unelected bureaucrats" and none need be voted on yet there seems to be no discomfit on the part of any of you about that.